Some clues about what’s going on in the U.S. economy are starting to emerge after weeks of confusion sown by Hurricane Sandy. And it doesn’t look all that great.
The superstorm severely distorted key economic indicators over the past month and it probably will do so again with this week’s headline report on job creation in November. Economist forecast a small net gain in new hiring: 75,000.
Yet buried within the recent array of economic reports is sufficient evidence to point to a slower pace of U.S. growth.
Investors will search for further hints in other reports this week on manufacturing orders, auto sales and consumer sentiment. At the very least, they hope to see a steady-as-she-goes trend in these numbers.
Upside surprises would be, well, a big surprise because of the lingering effects of Sandy.
“Trying to forecast these numbers is very difficult,” said economist Sam Bullard of Wells Fargo. “We are seeing Sandy’s effect across the board.”
Looking beyond the hurricane, the fourth quarter of 2012 has clearly gotten off to a slow start. Consumer spending, by far the biggest source of economic growth, fell in October for the first time in five months. And orders for expensive, long-lasting goods were flat in October.
To be sure, Sandy disrupted economic life in the Northeast in late October and contributed to the decline in spending. Yet consumers appeared to be reluctant shoppers last month even when the effects of the storm are discounted, economists say.
Part of the reason: wages haven’t risen much and Americans don’t have a lot of savings tucked away.
Still, consumers have grown more confident over the past few months, according to several monthly surveys. And higher consumers eventually leads to more spending. Read more on consumer confidence.
What would really help is a burst in hiring. More jobs means more income and more spending.
The odds that hiring increased sharply in November are small. Economists surveyed by MarketWatch forecast that the U.S. added a scant 75,000 jobs last month, which would mark the lowest round of hiring since June. The unemployment rate is expected to be unchanged at 7.9%.
Via – MarketWatch
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